Essays on Financial Reporting Quality: Evidences from Seasoned Equity Offering and Product Market Competition.

摘要

This dissertation is comprised of three essays. The first essay documents the importance of earnings timeliness in equity offering events; the second essay records market power as an important determinant of accrual management; the third essay examines the relation between product market competition and audit fees.;Essay I, "Earnings timeliness and seasoned equity offering announcement effect" examines the effects of earnings timeliness on the Seasoned Equity Offering (SEO) announcement returns. Investors view an SEO announcement as a negative signal that indicates the overvaluation of current stock price. This condition can be mitigated, however, through a firm's ability to capture current value-relevant information, namely earnings timeliness. I predict and find, then, that firms with greater earnings timeliness have less negative SEO announcement-period returns.;The second essay, "Market power and accrual management", examines whether a firm's competition status in product market affects its discretionary accrual. I argue that because firms with greater market power have a greater ability to set prices for their products, they have comparatively fewer incentives to manipulate earnings through accrual management. I use the Lerner index to measure product market power and asset-deflated absolute discretionary accruals to proxy the magnitude of accrual management. I find that firms with greater market power tend to have lower levels of accrual management.;The final essay, "Product market competition and audit fees", empirically explores the effect of product market competition on audit fees. Prior literature posits two contradictory predictions on the relation between product market competition and audit fees. On the one hand, firms in a competitive market are expected to face higher liquidity risk, distress risk, and liquidation risk, thus increasing auditors' assessments of a client's business risk. So, audit fees are expected to increase with industry competitiveness. On the other hand, some paper argue that product market competition decreases information asymmetry and mitigates agency problems between shareholders and managers and increases the accuracy of financial statements, thus decreasing auditors' audit risk. So auditors tend to charge lower fees on firms in a more competitive industry. The study finds that auditors charge higher fees on firms in a more competitive industry.